Dear PAO,

I am 62 years old and I have worked for the same employer for the last 32 years. When I submitted my resignation letter last week, my employer informed me that I will not be receiving any retirement benefits because the company does not have an official retirement policy. Additionally, my contract does not have any provision granting retirement benefits. Is this legal?

Dave

Dear Dave,

No, the denial of your retirement benefit may be deemed illegal.

Republic Act (RA) 7641, which amended Article 302 of the Labor Code of the Philippines, provides:

“Article 302. Retirement – xxx

“In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month’s salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

“Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.”

In De la Salle Araneta University v. Bernado, GR 190809, Feb. 13, 2017, Ponente: Chief Justice Teresita Leonardo-De Castro, the Supreme Court emphasized that RA 7641 is a curative social legislation, which intends to give the minimum retirement benefits to employees who are not entitled to such benefits under collective bargaining and other agreements or retirement plans.

Likewise, in Capili v. NLRC, GR 120802, June 17, 1997, Ponente: Chief Justice Hilario Davide, Jr., the high court explained the two types of retirement, to wit:

“The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer’s retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer’s retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee.”

Thus, regardless of whether your company has a retirement policy, you are still entitled to such benefit under the Labor Code, as amended by RA 7641. As to date, you have already attained the required age (62 years old) and tenurial (32 years in service) requisite for you to be considered as an optional retiree, which consequentially entitles you to a retirement pay equivalent to at least one-half (1/2) of your monthly salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

We appreciate your trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]